What You Need to Know About the Hidden Health Cost of Fossil Fuel Subsidies

Fossil fuel companies receive billions of dollars in government subsidies each year. A major argument for ending those subsidies these days, is the effect that carbon-based pollution has on the atmosphere – what scientists now say causes climate change.

But new research suggests that there is another compelling reasons for halting reconsidering that funding that our tax payer dollars cover: our health.

According to a study by the European not-for-profit organization, Health and Environment Alliance (HEAL), fossil fuel subsidies from G20 countries amount to $444 billion per year. That amount, say researchers, is actually small compared to the health costs that are incurred as a result of fossil fuel industries. Researchers found that the use of fossil fuels resulted in health-related costs of more $2.76 trillion across the globe, or six times the total cost of those government subsidies.

Premature death related to air pollution, cardiovascular and pulmonary diseases and the adverse and catastrophic effects of climate change were some of the impacts that researchers tied to fossil fuel use.

Data from the International Monetary Fund and the Overseas Development Institute were compared with figures supplied by Oil Change International, allowing researchers to extrapolate the impact of fossil fuel industry on health.

By juxtaposing the two data sets, HEAL has illustrated for the first time the extent of health costs caused by fossil fuel combustion, and the subsidies that drive it,” said HEAL.

ODI and OCI figures (2013-2014) allowed researchers to look at the international sources for direct spending, tax deductions, public funding from state-owned enterprises and financial institutions that were majority government-owned.

An IMF publication entitled, “Getting energy prices right” provided data on health impacts of air pollution. The publication by Parry et al (2014) looked at the amount of air pollution that was inhaled by residents living near industrial sites. “This pollution intake is then evaluated on the basis of latest evidence on the relationship between air pollution exposure and mortality rates for pollution-related diseases,” said HEAL.

The researchers then “monetized” those health impacts by looking at the trade-offs that residents make between health and financial considerations.

The writers also pointed out that not all fossil fuels are equal. Liquified Petroleum Gas (LPG), for example outweighed the use of coal as a cooking fuel and that replacement has actually led to better health and quality of life for many populations in India.

The report identified five key reasons to eliminate fossil fuel subsidies, those monies that allow fossil fuel industries to remain in place as usage of carbon-based fuels decrease.

Subsidies undermine the agreements made at the Paris Accord to limit global warming to 1.5 degrees C.

The report also points out that while there is no binding definition of fossil fuel subsidies, the World Trade Organization defines a subsidy as “any financial contribution by a government, or agent of a government, that confers a benefit on its recipients.” Companies and governments often assign their own interpretation of subsidies, making it harder to gauge the real dollar-cost of such funding. Instead, says HEAL, subsidies are any contribution, public or consumer based that aid or incentivize the industry’s continuation.

The report also looked at which the five greatest offenders when it came to fossil fuel-related health impacts. China came in first at $1785.4 billion, followed by the European Union at $229.5B. The US was third, with fossil-fuel-related health costs estimated at $219.2B. Russia and India followed at $196.4B and $140.7B, respectively.

The report reflects the latest effort to encourage governments to look at the comprehensive cost of supporting carbon-based energy with externalities factored into their cost (e.g., those health costs that often aren't regarded when considering a company's significance). HEAL, which is made up of some 75 public health organizations and professionals has been pushing the EU and other nations to reconsider subsidies for certain industries that have been found to adversely affect public health. It’s also called for a mechanism by which industries, like coal, can be assessed based on its impact on global health issues, including climate change risks.

Readers can find the report, Hidden Price Tags: How Ending Fossil Fuel Subsidies Would Benefit Our Health and other publications on HEAL's website.

Jan Lee is a former news editor and award-winning editorial writer whose non-fiction and fiction have been published in the U.S., Canada, Mexico, the U.K. and Australia. Her articles and posts can be found on TriplePundit, JustMeans, and her blog, The Multicultural Jew, as well as other publications. She currently splits her residence between the city of Vancouver, British Columbia and the rural farmlands of Idaho.